5 ms·

What are the risks for the homeowner? The wording seems too good to be true. It seems like it would be better for me to just sell you the land for $640k, then

What are the risks for the homeowner? The wording seems too good to be true. It seems like it would be better for me to just sell you the land for $640k, then you take on the risk of developing and selling it, but if that was how much the land is now worth, it might still be better for me to hold on to it and let it appreciate for a while without neighbors spitting distance from my back porch.

sam_schneider 5y ago
There is a non-zero chance—-very unlikely: it would require a 50%-60% decrease in housing prices—-that they could lose the backyard without making income. The weighted probability might lower the Expected Value 1k. That said, foreclosure would still be beholden to the profit split agreement should the lot be profitable.
- treis 5y ago
  Can you share numbers from completed projects?
- baskethead 5y ago
  As house prices drop, more people will try to buy full-sized single family homes and the least desirable houses fall faster. You could get a 10% drop in house prices, but these split lot houses could fall 50% or more, just like condo prices. This happened during the housing crash of 2009. I know first hand, my own condo dropped by more than 50%, which I did a strategic default on.
dzink 5y ago
You can't undo the split. One of the caveats passed in the same vote states that you can't reduce housing density - so if you build two units, they can't be reunited into one lot again.
- chrisseaton 5y ago
  How does this work in law? Can't I just own and use both lots at the same time? Would I need to technically 'reunite' them? Can't I just use both of them at the same time?
  - b112 5y ago
    Higher property tax, as the downside, for two vs one lot?
  - fortylove 5y ago
    I'm assuming for future construction, you'd have to treat each lot as separate with regards to setbacks from the property lines. So no building a house that straddles the old property line, I suppose

sam_schneider 5y ago

There is a non-zero chance—-very unlikely: it would require a 50%-60% decrease in housing prices—-that they could lose the backyard without making income. The weighted probability might lower the Expected Value 1k. That said, foreclosure would still be beholden to the profit split agreement should the lot be profitable.

treis 5y ago
Can you share numbers from completed projects?
baskethead 5y ago
As house prices drop, more people will try to buy full-sized single family homes and the least desirable houses fall faster. You could get a 10% drop in house prices, but these split lot houses could fall 50% or more, just like condo prices. This happened during the housing crash of 2009. I know first hand, my own condo dropped by more than 50%, which I did a strategic default on.

dzink 5y ago

You can't undo the split. One of the caveats passed in the same vote states that you can't reduce housing density - so if you build two units, they can't be reunited into one lot again.

chrisseaton 5y ago
How does this work in law? Can't I just own and use both lots at the same time? Would I need to technically 'reunite' them? Can't I just use both of them at the same time?
- b112 5y ago
  Higher property tax, as the downside, for two vs one lot?
- fortylove 5y ago
  I'm assuming for future construction, you'd have to treat each lot as separate with regards to setbacks from the property lines. So no building a house that straddles the old property line, I suppose